False Claims Act and Government Contracts Cases

Bartlit Beck represents clients in complex, high-stakes False Claims Act disputes as well as government contracts and cost accounting standards cases. Our experience includes significant trials and appeals against the Department of Justice and lawyers from other government agencies, as well as successful settlement negotiations that avoided litigation. These disputes often present unusual challenges, including those arising from litigating against a significant customer, and a legal regime that tends to advantage the government. We approach these cases as trial lawyers, presenting the government and other opponents with the credible prospect that our clients will take the dispute to trial, if necessary.

Our experience includes:

Sikorsky Aircraft Corporation v. United States (Court of Federal Claims; Court of Appeals for the Federal Circuit)Trial and appellate counsel for Sikorsky in two related actions by the Department of Justice in which the government asserted claims of more than $100 million. The government alleged that Sikorsky overcharged for military aircraft and parts in violation of government contracts and Cost Accounting Standards. In the first action, Sikorsky prevailed at trial, and the Federal Circuit affirmed the judgment for Sikorsky. The case set precedent in the interpretation of Cost Accounting Standard 418. See Sikorsky Aircraft Corp. v. U.S., 110 Fed. Cl. 210 (2013), aff’d, 773 F.3d 1315 (Fed. Cir. 2014).

In the follow-on related action, the trial court granted Sikorsky’s motion for judgment on the pleadings, dismissed the government’s claims, and awarded Sikorsky costs. The government again appealed to the Federal Circuit, but voluntarily withdrew the appeal before briefing, concluding the litigation in Sikorsky’s favor.

United States v. United Technologies Corp. (Federal District Court, S.D. Ohio; Court of Appeals for the Sixth Circuit)Trial counsel and appellate co-counsel for United Technologies in a $600 million False Claims Act suit brought by the Department of Justice. The government alleged that UTC division Pratt & Whitney inflated prices on jet engine sales to the Air Force during the “Great Engine War” with GE, a multi-billion dollar competitive military procurement during the 1980s. The case involved a ten-week bench trial, two rounds of appeals to the Sixth Circuit, and two rounds of remand proceedings in the trial court.

After the bench trial, the trial court held that Pratt had made three false statements in a 1983 bid, but the court rejected the government’s $600 million damages theory, held that actual damages were zero, and imposed a statutory penalty of $7.1 million. After a subsequent remand ruling in which the district court reversed its trial ruling on damages and awarded the full amount sought, $664 million, UTC appealed. The Sixth Circuit reversed the damages award, held that the bench-trial record established that the government had suffered no actual damages, and remanded to the trial court again. U.S. v. United Technologies, 782 F.3d 718 (6th Cir. 2015).

On the second remand, the government finally abandoned its $600 million damages theory and in June 2016, the trial court entered final judgment of $1.2 million with interest of $2.8 million (plus the $7.1 million penalty). The government’s time to appeal expired in August 2016, concluding the litigation.

Baycol Qui Tam (Federal District Court, D. Minn.; Court of Appeals for the Eighth Circuit)Bayer was involved in broad litigation concerning Baycol, a cholesterol-lowering medicine that was voluntarily withdrawn. This litigation included a False Claims Act qui tam action relating to Baycol that a former employee initiated. Bartlit Beck successfully obtained dismissal of the qui tam action before the Baycol MDL Judge. In October 2013, the Eighth Circuit affirmed the dismissal of the False Claims Act claims for failure to plead with particularity under Federal Rule of Civil Procedure 9(b), and affirmed the district court’s refusal to allow the relator to amend the complaint a third time. The Eighth Circuit let stand a fraudulent inducement theory that related to a portion of the case. On remand to the district court, the court granted Bayer’s motion to dismiss the remaining claims, and the relator again appealed. The matter is currently before the Eighth Circuit.

United States ex rel. Oberg v. Nelnet et al. (Federal District Court, E.D. Va.) Retained as trial counsel by Nelnet (one of the nation’s largest student loan lenders), after years of litigation, in a qui tam action under the False Claims Act. Counsel for the relator was Bert Rein of Wiley Rein LLP. The relator alleged that Nelnet exploited a statutory loophole to submit false claims for about $300 million in student loan subsidies, threatening trebled damages of nearly $1 billion. The responsible federal agency had informally advised Nelnet that the challenged practice was legal, but the relator alleged that it was a sham designed to evade certain federal legislation. After conducting a mock jury exercise to reframe trial themes and successfully moving to limit the relator’s expert testimony in various ways, we settled the case favorably the day before jury selection.

United States, ex rel. Jimenez v. Otter Products LLC (Federal District Court, D. Col.)Represented Otter Products in a False Claims Act case related to customs duties. The relator and the government claimed that Otter Products failed to pay customs duties on molds used to create OtterBox protective cases for phones imported into the United States. Customs and Border Protection conducted a parallel investigation while the relator filed suit in the District of Colorado. Otter Products made a prior disclosure under the Tariff Act relating to payments on some unpaid customs duties and argued that the Customs and Border Protection’s investigation and possible penalty action before the Court of International Trade barred the False Claim Act suit. Bartlit Beck was retained as trial counsel and led negotiations with the relator, the Department of Justice, and Customs and Border Protection that resulted in a favorable settlement.

Appeal of Pratt & Whitney (Armed Services Board of Contract Appeal)Representing Pratt & Whitney in an action challenging the government’s $210 million claim alleging non-compliance with Cost Accounting Standards in connection with Pratt’s use of collaboration agreements for the design, development, and manufacture of commercial aircraft engines.

Confidential MediationRepresented defense-contractor in a Department of Justice investigation of an aircraft part failure. The dispute was resolved favorably by negotiation and mediation, and litigation was avoided.